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Divorce Mediation Blog

Post- Divorce Health Insurance: A Recent Decision and the Need for Reform

Wednesday, April 02, 2014

Previously, we wondered why the legislature tied a trial judge's mandatory inquiry into available health insurance at a reasonable cost to the provision of alimony in M.G.L., chapter 208, section 34. Particularly in view of the individual mandates of MA and now federal law, this seems anachronistic, at best, and begging for reform.

In the recent case of Young v. Young (12-P-1573), a Memorandum and Order Pursuant to Rule 1:28 (a so-called "unreported" decision) the Appeals Court, upheld a Probate Court judgment in which one appellate issue was the husband's complaint that the court had ordered him to provide health insurance for the wife when he was not ordered to pay alimony.

The case did not specify why no alimony issued, but we surmise from the facts reported that this was a forty year marriage and that wife was not yet retired, that either the Husband had passed the statutory retirement age and/or that neither party had "need" for spousal support. The judge did conclude, however, that the health insurance order was justified by the wife's expectation of losing work coverage at retirement and the fact that eventually, both parties will receive low cost health benefits attendant to the onset of the husband's military retirement pay.

Putting aside that these reasons seem to be a non-sequitor (What does the wife's anticipated loss of coverage have to do with coverage now? If she has coverage now, why does she need the husband's? What does post-retirement military health benefits have to do with either?), clearly this trial judge did not feel inhibited from awarding health insurance coverage to a non-alimony recipient.

Under the right circumstances, of course, this is a perfectly sensible result, which raises this question: is it time to look at post-divorce health insurance coverage anew? Since Massachusetts stepped out in front of all other states with its spousal continuation laws, and then with health exchanges and individual mandate, should it not be the first to look at this incredibly important subject comprehensively?

At a minimum, we think that the legislature ought to look at the discrepancies between M.G.L., chapter 208, section 34 and the Alimony Reform Act (can a payor's cost reduce alimony or not?), close the self-insurance loophole for employer-provided coverage (why should large companies with the capacity to absorb employee medical cost risks be exempt from covering ex-spouses where insurance companies are not), clarify portability of post-divorce spousal coverage (discretionary for subsequent employers now) and provide guidance as to what level of coverage and cost can or should be mandated. Importantly, this topic should be covered in one, comprehensive chapter or section of its own. The stakes are way too critical to the security of MA residents to be left to grasping at disparate authorities and guessing at outcomes.

As divorce mediators and family law arbitrators, we feel the need for clarity, consistency and a reflection of broad societal change in this vitally important area.

 

Health Insurance In Section 34 And Alimony Reform - Part 2

Sunday, February 16, 2014

In the last blog entry, we introduced this topic and explored the first sentence of the health insurance portion of MGL, chapter 208, section 34, which we set forth in its entirety. It is apparent that a trial judge must make inquiry into spousal health insurance coverage that is available to an alimony payor . On close reading, it is difficult to understand exactly what the meets and bounds of that inquiry are, but plainly it places a priority on providing coverage. This is unsurprising in the current era of health care reform, despite the fact that the section 34 language preceded both the state and federal the individual mandates.

Here, we consider section 34’s relationship to MGL, chapter 208, sections 53 (eff. 3/1/12), which it also preceded. To do so, we take on the third sentence of section 34’s health insurance provision. It says:

    In no event shall the order for alimony be reduced as a result of the obligor’s cost for health insurance coverage for the spouse.

And, it remains good law. Yet, the new alimony law, states that:

    (e) In setting an initial alimony order, or in modifying an existing order, the court may deviate from duration and amount limits for general term alimony and rehabilitative alimony upon written findings that deviation is necessary. Grounds for deviation may include: …
    (3)whether the payor spouse is providing health insurance and the cost of health insurance for the recipient spouse…

So, which law prevails? The one that says that alimony cannot be reduced by reason of costs for health insurance or the one that states that it may?

Previously, we observed how little the health insurance provision of section 34 has been litigated. This statutory conflict may well change that. As divorce mediators, we help our clients address these matters practically, but as divorce arbitrators, we await, and now need, appellate clarification.

 

Health Insurance in Section 34 And Alimony Reform - Part 1

Wednesday, February 12, 2014

IT NEVER HURTS TO RE-READ A STATUTE!

Divorce lawyers, mediators and arbitrators: when was the last time you actually read M.G.L., chapter, section 34? We read it every once in a while, because some particular need; and we are often surprised when we do.

During a recent lawyer-attended divorce mediation, we were addressing the impact of the wife's loss of medical coverage due to her husband's employer being self-insured, and thus, exempt from the Massachusetts spousal insurance continuation rules. We all knew that section 34 had something to say about it, but none of us were 100% sure of its substance. It was pretty clear that we were at risk of conflating section 34 with the new alimony statute's provisions (eff. 3/1/12) on point.

So, we cracked the "green book" (ours is actually maroon) and scanned the statute until we found this:

    When the court makes an order for alimony on behalf of a spouse, said court shall determine whether the obligor under such order has health insurance or other health coverage available to him through an employer or organization or has health insurance or other health coverage available to him at reasonable cost that may be extended to cover the spouse for whom support is ordered. When said court has determined that the obligor has such insurance or coverage available to him, said court shall include in the support order a requirement that the obligor do one of the following: exercise the option of additional coverage in favor of the spouse, obtain coverage for the spouse, or reimburse the spouse for the cost of health insurance. In no event shall the order for alimony be reduced as a result of the obligor’s cost for health insurance coverage for the spouse.

Over two blog entries, we will break the first and third sentences of this provision down, by clause, beginning with sentence one:

    1) When the court makes an order for alimony on behalf of a spouse,
    2) said court shall determine whether the obligor under such order has health insurance or other health coverage available to him through an employer or organization
    3) or has health insurance or other health coverage available to him
    4) at reasonable cost that may be extended to cover the spouse for whom support is ordered.

The first part is clear: the obligations that follow in clauses 2-4 only arise in conjunction with an alimony order. But, we have to ask the question, why? Where section 34 authorizes a judge to award property in lieu of alimony, is health insurance somehow less of a priority? With the “new” mandatory cut-off of alimony by term or payor retirement age (subject to deviation), and the quasi-mandatory termination or suspension for cohabitation, alimony recipients are plowing new ground in seeking greater property shares to mitigate alimony limits. If they seek extra property in lieu of alimony, are they then foregoing valuable medical insurance benefits?

Second, in light of Massachusetts and federal health insurance reform, what does "health insurance or other health coverage available to him through an employer or organization" mean? (Don't get caught up in the legislative gender choice!). Since first reference is made to "employer" coverage, does this exclude the self-employed? If so, are sole proprietors, partners and LLC shareholders exempt?

Are health care exchanges "organizations"? If so, is individual coverage available to a former spouse via private coverage "available" to the alimony payor? If it is deemed "available" to the payee only because only he or she can contract for it, does this mean that the court lacks the funding authority of clause 4? Should it? And, what is the difference between "health insurance" and "health coverage" anyway?

Is there any place in this scheme for comparing the alimony recipient's coverage through his or her own sources at all? Or comparative costs? From among personal employment, self-employment and private coverage, there may be no need for the funding section of clause 4, yet the language throughout this part of section 34 appears to be mandatory. Does this conflict with the "needs" limitation to alimony?

Finally, what really is "reasonable cost"? Especially now, health insurance is judged on a matrix of costs and benefits, together denominating value. ACA and MA law both encourage a sophisticated approach to evaluating coverage by consumers. Is reasonableness to be judged by catastrophic coverage standards, by comprehensiveness, by co-pays, by deductibles? Is reasonableness somehow related to the appellate definition of "need", i.e., comparability the coverage enjoyed during the marriage. Is it bound by the payor’s ability to pay?

As divorce mediators our job is to know what the law says, give information about it and then plumb the practical solutions to the problem of health care and support. As divorce arbitrators, we have to be more concerned with, just what does this provision mean? It is surprising how little litigation this interesting and complex part of section 34 has spawned over the years. Our next blog entry highlights an area that may just change all of that.

 

Post-Divorce Health Insurance in For Same Sex Spouses: One More Reason to End DOMA

Wednesday, June 12, 2013

In a previous entry, we discussed the “self-insured” loophole to the Massachusetts insurance laws that otherwise require extension of medical benefits beyond federal "COBRA" benefits to ex-spouses. If a family is unlucky enough to have employer coverage where risk of loss remains the employer’s, rather than an insurer’s, these benefits do not apply; and the parties must default to the less generous COBRA.

As difficult as this is for families who depend on self-insured employers, the result is even more draconian for same sex ex-spouses. This is because the existing federal Defense of Marriage Act (DOMA), does not recognize legally married couples of the same gender (now including ten states and D.C.) as spouses, at all. Since spousal COBRA rights require a federally recognized marriage, divorced same sex spouses with self-insured employers here remain uncovered by any spousal continuation benefits.

Beyond simple unfairness, this undermines the policy of the 2012 Affordable Care Act, as it becomes fully operative in 2014: just one more reason to hope that the United States Supreme Court strikes down DOMA.

 

Post-Divorce Health Insurance in Massachusetts: Time to Close the Self-Insurance Loophole?

Wednesday, June 05, 2013

Many years after Massachusetts created significant rights for divorcing families beyond the federal "COBRA" benefits for coverage of ex-spouses, an important loophole remains that undermines objectives of those statutes. In this entry, we will consider one of the exclusion of "self-insured" company medical plans from the scope of these enumerated rights.

In simple terms, our law states that medical insurers cannot exclude unmarried ex-spouses from an employee's family plan coverage post-divorce; and even if the employee-spouse remarries, the insurer must extend "rider" coverage to the unmarried former husband or wife. The insurance carrier may charge for rider coverage, but it may not surcharge. These benefits significantly exceed the so-called "COBRA” coverage provided by federal statute (36 months of maximum coverage at surcharged rates).

Yet, these benefits are not available to everyone with employment medical coverage in the Commonwealth. That is because these statutes do not apply to so-called “self-insured” medical plans (where the employer assumes the risks of employee medical costs, rather than an insurer), leaving their divorcing employees and their families to the lesser federal COBRA benefits. (Worse still, as we will discuss in a later entry, same sex divorcees have no protection at all, since they do not qualify for COBRA at this time.)

The reason for this unfortunate loophole is that these laws are insurance-based. They fall within the insurance statutes, regulating that industry; and the legislature did not extend these substantive family law rights beyond the insurance statutes. Further, what looks like an insurance plan may not be one. Self-insurers often hire insurance companies to serve as “administrators” of the plan, while the risk of loss remains the employer’s. Thus, while the employee may have what looks like an insurer’s coverage card, the law does not apply.

Meanwhile, since the 2006 Health Reform law here, the policy of the Commonwealth is that all residents have medical insurance. Next year, that will be effective federal law, too. The self-insured loophole is certainly inconsistent with these state and federal policies. Moreover, is it not unreasonable to disproportionately burden divorced persons who are unlucky enough to have a self-insured employer? Under current law, they can obtain private coverage, but it is routinely more expensive and/or less comprehensive than group employment coverage.

If the intent of the insurance laws and health coverage reform is to assist divided families, and to protect taxpayers from funding the insurable medical expenses of split dependents, is there any sustainable policy basis for maintaining this gap in the law? As divorce mediators, we grapple with the impact of the self-insured loophole.

Isn't a legislative fix long overdue?

 

Obama Care, Romney Care and Divorce in Massachusetts

Wednesday, April 18, 2012

During this time of national debate about the Affordable Health Care Act, now two years old and being challenged in the United States Supreme Court, we are receiving media messages about Massachusetts health care reform that occurred during the Romney administration here, and it relationship to the federal law. The former governor opposes in the federal law, whose close cousin is the Massachusetts precedent. Should divorcing spouses be especially concerned?

Whether you see Obama Care as government intrusion into Americans’ self-determination, a weak substitute for a single payer system or somewhere in between, the impact on divorcing spouses, as opposed to the population at large, is not especially concerning. That is because, unlike residents of most states, we in Massachusetts do not look to federal law predominantly for post-divorce health coverage protection. The states that do rely on federal law can only assure a divorced non-employee spouse of up to 36 months of continuing health coverage on the other spouse’s work plan. So-called COBRA coverage costs 102% of the cost to the group to cover an individual, and when the three years expired, the ex-spouse is expelled from any continuing family plan that continues to cover the employee-spouse and children.

Massachusetts state law, by contrast, requires health insurance carriers to provide continuing coverage for a non-employee ex-spouse on the continuing family plan at no additional cost, until the employee ex-spouse marries another person. Even then, as long as the non-employee spouse remains unmarried and has no other employer-provided health insurance available, the insurance company is still required to extend coverage to the non-employee spouse for an indefinite period of time, at the same cost of an individual employee in the particular plan. Massachusetts’ law favors coverage for divorced people, and it controls over federal law for Massachusetts residents. (There are holes in our statute such as the “self-insured exception”, but the number of persons affected by that is relatively small.) There is nothing in the challenge to Obama Care that should adversely affect the Massachusetts protection of divorced spouses.

One aspect of Obama Care that has caught substantial attention and that often concerns divorcing parents, though not a divorce provision of the law per se, is the extension of coverage for dependent children to age 26 on their parent’s employment health plan. But, this existed in our state law before Congress adopted it, and there is no reason to assume that any action by the Supreme Court to strike this down nationally would impact on our state law. The same is true about our state law, which prohibits health insurance carriers from refusing to cover a person with pre-existing health conditions. If the federal “individual mandate” falls, that could challenge the viability of mandatory insurance here for political, but not likely for constitutional reasons.

Divorcing couples have enough problems, as is. The machinations of national politics and the U.S. Supreme Court will probably not make things more difficult for divorcing couples in Massachusetts on the question of health care, than for any other non-divorcing citizen. One less thing to worry about, and that is a good thing.

 



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